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My father had subscribed to a life insurance policy some 15

Customer Question

My father had subscribed to a life insurance policy some 15 years ago in Italy. The policy would have paid out a certain lump sum to his family after 15 years in case of death. Otherwise it would have still paid out a sum, albeit it a smaller amount. The latter case being the circumstance, during the fiscal year 2013/14 I have been paid a lum sum from my father's insurer in Italy. I am a resident of the UK. I am trying to figure out if and how much tax I should pay in respect of this sum paid to me by the Italian insurer.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
, I'm Keith and happy to help you with your question.
Good news, no UK tax liability assuming no gain has been made on the payment or other benefit received in connection with a foreign policy. This would be the normal standard tax treatment maturing life insurance policy.
The Gov UK web site gives the following advice when completing your annual self assessment tax return:
'You do not have a foreign Personal Portfolio Bond you may leave boxes 43 to 45 blank.'
I do hope I have helped put your mind at rest on this matter.
Customer: replied 2 years ago.
Keith,
Can you please clarify what you mean with "assuming no gain has been made on the payment received"? Does the payment itself to me not constitute a gain?
Regards
Edoardo
Expert:  bigduckontax replied 2 years ago.
No Edoardo, the sum assured was written into the policy on issue so its maturity does not constitute a gain. There might be a gain if the policy was than ten years duration, but that is not the case here.
Regards
Keith
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3609
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 2 years ago.
Thank you support.
Customer: replied 2 years ago.
Many thanks Keith prompt response.
Edoardo
Expert:  bigduckontax replied 2 years ago.

Delighted to have been of assistance Edoardo.

Thank you most generous bonus.

Customer: replied 2 years ago.
Keith,
I've asked my father a few more details about that life insurance policy. Not sure whether this changes things, but in essence he had invested a certain lump sum of capital into this life insurance policy 15 years ago. The insurer invested the sum and at maturity after 15 years returned the sum with gains to me (and my brothers). According to my father the sum paid out by the insurer did definitely include gains when compared to the initial capital piad into the policy. Does the fact that the policy was than 10 years negate any tax due? If tax is due, would it be capital gains tax or would I have to treat it as income, therefore would have to pay income tax on it?
Regards
Edoardo
Expert:  bigduckontax replied 2 years ago.
Here is an opinion from Wikipedia.org:
'Essentially, long term contracts (10 years plus) tend to be qualifying policies and the proceeds are free from income tax and capital gains tax.'

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